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Editorial Pay is the big issue on Budget day, but does Labour understand this?

TOMORROW’S Budget will be presented, like all of its kind, as a success story.

The government will announce significant-sounding spending commitments to tackle issues like the backlog in NHS operations and its readiness to lift the freeze on public-sector pay, but within a framework of spending restraint.

As in the spring, Chancellor Rishi Sunak may prove capable of wrongfooting the opposition in the process. Then, a mooted rise in corporation tax tricked Keir Starmer into loudly opposing such a move, undermining Labour’s claim to stand for a redistribution of wealth; having watched the party take the bait and infuriate its core supporters, Sunak then announced a sufficient delay to the proposal to render it hypothetical and irrelevant.

The big issue this autumn is pay, with families feeling the squeeze as bills and prices rise and government support in forms like the £20 universal credit uplift withdrawn. 

It will not be hard for the Tories to outmanoeuvre Labour on pay, because the opposition shows a stultifying lack of ambition that leaves just a few pounds a week between its own proposals and current realities. 

Indeed, Labour was outmanoeuvred earlier this year, when it fought a mostly disastrous local election campaign in opposition to the Tories’ offer of a 1 per cent rise to NHS staff but declined to back the pay demands of NHS unions (which ranged from 12.5 to 15 per cent raises, addressing the years of real-terms cuts suffered by health workers). 

Labour refused even to stand by the 5 per cent raise it had promised in its 2019 manifesto, instead trying to make a virtue of calling for a rise of “at least” 2.1 per cent. The party was left high and dry when the Conservatives calmly upped their offer to a still measly 3 per cent.

The same attitude was on display at Labour’s conference last month, when shadow employment rights secretary Andy McDonald resigned from the shadow cabinet rather than follow Starmer’s instruction to oppose the £15-an-hour minimum wage called for by multiple trade unions.

Its call for £10 an hour is hardly going to convince workers that the party has their back when the Tories have themselves committed to that figure being met by the next election.

What explains Labour’s self-defeating timidity? 

Partly Starmer’s fixation with reassuring big business, not the public, that Labour is a safe pair of hands following its dangerous flirtation with socialism over the last six years.

But partly an obsession with reliving the Blair years that is reflected in his reliance on advice from Blair-era schemer Peter Mandelson, his constant attacks on the left and unprovoked confrontations with his own party and an economic outlook that misses the significance of the bankers’ crash, Brexit, Corbynism and the pandemic.

Labour is still terrified of being depicted as a “tax-and-spend” party, though the Tories themselves have embraced that image, if not its reality — and despite no realistic reading of the 2019 election defeat ascribing it to Labour’s spending plans.

The public mood is considerably more radical. Staff in the NHS are balloting for strike action over their pitiful pay offer. Workers across the public sector are demanding proper raises. In certain private-sector industries they are using labour shortages to demand higher wages, while public opinion is firmly behind bans on cynical corporate machinations like fire and rehire designed to push pay down.

Labour demonstrated from 2015 that when it called the Tories’ bluff on austerity and had the courage to argue against it, the public debate quickly changed. The Conservatives were forced to disown the policy. 

Now Sunak is hinting at a new cycle of spending cuts as the cost of living rises. Public opinion is not with him. But Labour will have to get real on Britain’s need for higher pay if it is to reap the benefits.


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